Information technology and profitability - MyAssignmenthelp.com

Question: Discuss about Information technology and profitability. Answer: Introduction In the modern times it has become necessary for the firms to take use of advanced technology. As information and technology has not only fasten the speed of operation but it has also enhanced the efficiency of the firms (Rai Tang, 2013). IT is being utilised in various fields of business. It has become essential for the companies to use IT systems that helps in making work process easier. Customised IT systems for various industries has helped firm in making their operational procedures easier and efficient. Every department within an organisation is somehow interconnected with information technology. This has empowered management to have control over the operations of the firm while sitting far away from their workplace. This report highlights the ways in which IT has affected the business in positive and negative senses. It also underlines the empowerment that is given by advanced software and hardware to various businesses. Use of IT in business This is the Era of technology which has forced companies to make use of IT systems for their operations (Venkatesh, Thong and Xu, 2012). There are many kinds of systems that are available for operations in various fields of business. Some of the most widely used technologies in various operations are as possible. Marketing: Todays marketing has shifted from traditional ways to the digital mediums. It has made the processes simpler and has a potential of reaching to larger sections of the society (Wu, Straub and Liang, 2015). Use of websites and apps has given direct contact with consumers which help them in showcasing various aspects of the products to consumers and hence increasing sale. Apart from this it is also to be understood that use of modern software and social media sites reduces the overall cost of operation as well as it gives the larger view of the market. Data management: It has become essential for the firms to manage its data. Use of technology in this regard has reduced the complexity of the problems (Tanriverdi and Uysal, 2011). Many Multinational companies have their operational units in various parts of the world and hence it has become necessary for them to have centralised data storage and access system. Cloud software provides excellent solution in tis regards. Decision making: Various software are available with the firm which helps them in making quick decisions. These software evaluate the data that is stored by the company from their operations in past. This helps them in understanding the scenario and taking decisions accordingly. Sale: Companies are taking use of various websites like their own site or some other e-commerce website for selling their products (Business 2 Community, 2018). This has reduced the efforts of employees as multiple products can be made available to the consumers and they can select as per their choice. This helps company in enhancing their sale as more options gets available to potential consumers as per their demand. Manufacturing: There are several kinds of manufacturing processes in which IT is being used. One of the most significant roles of IT is in automation which helps them in performing operations without excess manual interventions. IT software helps firm in detecting any flaws as well as performing operations as per the requirement without delay and with an ultimate accuracy. Monitoring: IT systems have helped companies in monitoring various processes like performance management system. This helps managers in understanding complexity of the work as well as finding things that are actually reducing the efficiency of the firm and making changes in them so as to maintain the efficiency of the firm ( J, 2018). There are many software that are available with the firm which helps in checking any kinds of deviations if occur in daily processes. Designing: IT systems also helps in designing of the whole process as it measures all the complexities that is present in the working process and acts accordingly to design various products. This is done by the analysing the demands and trends of the market as well as the quality and quantity of resources that is available with the firm. Transaction processing systems: This is a system that is extremely beneficial for the accounts department as all the transaction between consumers and firm is done through this system. This helps in maintaining the records of the total sale all over the world as well as reducing any kind of discrepancies in accounting. Market research: It has become essential for the firm to analyse the marketing environment that is present around the company. For this purpose market research is being conducted. This helps in understanding the trends and demands of the market which is beneficial for making decisions in a better way which will give them edge over the other rivals. Benefits of using IT in business There are several kinds of benefits of using IT in business. Some of the most effective use of IT in business is as follows: Efficiency: These systems are highly efficient and are capable of resolving many kinds of problems (Otim, Dow, Grover and Wong, 2012). They are accurate and hence they provide effective solutions to the issues that arise in day to day operations. There are many kinds of checking software that are present which helps in any kinds of deviations that occur in the processes. Speed: All these IT technologies not only provide efficiency but also enhance the speed of operations. There are faster algorithms available for IT software which helps in enhancing the overall speed of procedures that are operated in various departments of the firm. This also ensures timely delivery of the products to consumers which is essential factor for maintaining employee satisfaction. Reduction in errors: Since this is a competitive era of business and hence it has become essential for the firm to have higher focus on reducing errors in production of products and services. IT systems are very beneficial in this regard as they are highly accurate and show the details immediately in case any discrepancies occur in the processes. This helps in maintaining the quality of products as they have promised to their customers. Issues in use of IT within business While there are larger numbers of benefits that are associated with the use of IT systems, there are several kinds of issues that are present in the use of IT systems. These issues reduce the performance of the firm as well as pose a greater threat. This can lead to failure of business which is not affordable in the present competitive environment. Some of the prominent issues that are present in the use of IT in business are as follows: Security: Threat of security is one of the biggest issues that are present in the modern day business while taking use of IT systems (Mithas, Tafti, Bardhan and Goh, 2012).Various cybercrimes have been noticed in the past which has led to huge loss for the company. These security breaches are extremely harmful for the company as the hacker intends to steal many kinds of information related to the business which can result in strategic failure. It is essential for the firms to take use of firewalls so as to ensure that there is no easy injection of corrupted program inside the system. These security breaches can be by internal or by external sources. Privacy: There are many kinds of private data that are available with the company and are stored in information system. These data are extremely crucial and if they get in some others hand, they can utilise them for their personal benefit. Loss to such important data can lead to strategic failure and giving edge to other rivals. Passwords or some kind of authentications can help company in securing data since it prevents from any kind of unauthorised access. High cost: These technological advancements are of higher cost and the changes in the technology are faster and hence company has to invest a lot. It is estimated that in every six months technology in the industry gets doubled which enhances the need of the firms to upgrade their technology. This requires a whole lot of money which ultimately reduces the overall revenue of the firm. Maintenance: These systems need regular maintenance and if not properly handled then it may produce outcomes that are undesirable. It is essential for the firm to keep a system or a group of workers who are responsible for maintaining the information system. These systems are complex hence considerable amount of knowledge is required for maintaining the systems. Ways to resolve these issues Use of malwares: This helps in reducing the amount of attacks through various sources. They restrict other infectious viruses to enter into the system. But it is essential that they regularly upgrade this software so as to maintain the protection against such software. Use of authentication password: It is important to maintain the privacy and hence it is essential to take use of authentication system like password protection system or OTP. These are highly helpful in protecting effective data. Maintenance: It is essential that company gives timely training to the employees so that they can maintain the information system in a better way. It helps in maintaining the standards according to industry which helps in making competitive edge over the others. Conclusion From the above based report it can be concluded that information and technology is highly beneficial for the business as it enhances the efficiency of the work as well as maintain the quality of operations. Information systems enhance the speed of operations and hence help in enhancing consumer satisfaction which is necessary for the firm. There are several issues that are present in the use if IT. It is crucial for the firm to look at all these issues so as to maintain their quality. One of the biggest problem that companies faces while using IT technologies is the problem of maintaining the quality of the whole information system. For this purpose it is important that firm train their employees on regular basis. Processes like marketing, sales, transactions, decision making process and data management has become easier and hence has facilitated management in making changes as per the requirement. Reference Business 2 Community, 2018. [Online]. Available at: https://www.business2community.com/tech-gadgets/importance-information-technology-business-today-01393380. [Accessed on: 25th January 2018]. Cichetti. J, 2018. [Online]. Role of Information Technology in Business. Available at: https://bizfluent.com/facts-5977213-role-information-technology-business.html. [Accessed on: 25th January 2018]. Mithas, S., Tafti, A.R., Bardhan, I. and Goh, J.M., 2012. Information technology and firm profitability: mechanisms and empirical evidence. Otim, S., Dow, K.E., Grover, V. and Wong, J.A., 2012. The impact of information technology investments on downside risk of the firm: alternative measurement of the business value of IT.Journal of Management Information Systems,29(1), pp.159-194. 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